By Antonio M.A Pedro
The confluence of shocks – the cascading impact of the COVID-19 pandemic, the war in Ukraine and severe natural disasters – have eroded Africa’s development gains, resulting in a staggering 149
million previously non-poor Africans now facing the risk of falling into poverty.
The growing number of new poor and vulnerable people is making it harder to close the gap between the rich and the poor. Moreover, Africa currently accounts for the largest share of the world’s poor. This
inevitably has a far-reaching impact on achieving sustainable development goals and the vision
of Africa we want.
The crisis, however daunting, presents an opportunity for the African ministers of finance,
planning and economic development assembling in Addis Ababa from 15-21 March 2023, to
make concerted efforts on providing concrete solutions. The theme, fostering recovery and
transformation in Africa to reduce inequalities and vulnerabilities should yield long-term actions to
move the continent forward on a path of prosperity.
First, there is a need for real action on reducing the high cost of trade. This can ease the burden
on access to affordable goods for poor, hard-hit households that are losing out on health,
education, and meaningful opportunities. It is also time to expedite the implementation of the
African Continental Free Trade Agreement (AfCTA) as a powerful lever for poverty reduction.
The AfCFTA’s promise cuts across all economic sectors, presenting a new pathway for broad-
based growth. In the agri-food sector, which is critical to overcoming vulnerabilities associated
with food insecurity for the over 300 million affected Africans, ECA estimates show that the
sector will yield an additional US$ 43.3 billion in trade revenue by 2045 if the agreement is
expedited. Additional opportunities abound in sectors such as pharmaceuticals, vehicles and
transport equipment, metals, and textiles, apparel and leather products.
Second, climate action must be mainstreamed in policy development and implementation. We
are living through the devastating impact of climate events that have led to the migration and
displacement of some 85 million people in the region. Increasing temperatures have already
contributed to a reduction by a third in average agricultural productivity growth, while the
continent’s 38 coastal countries are facing climate-related threats to their blue economies. The
climate crisis is not a fringe issue. It accentuates poverty through its impact on lives, livelihoods,
and economies. Governments can finance development through innovative green financing,
such as investing in nature-based sequestration which can provide up to 30% of the world’s
sequestration needs. At 120 USD per tonne of carbon, up to US$ 82 billion per year can be mobilized
from nature-based carbon credits in Africa.
Above all, moving the continent out of these crises will require resolving the fundamental flaws
underpinning the international financial architecture and acting on lasting reforms. In the words of
UN Secretary-General António Guterres, “today’s poly-crises are compounding shocks on developing
countries – in large part because of an unfair global financial system that is short-term, crisis-prone,
and that further exacerbates inequalities.” Reforming the system is key to reducing the shrinking
fiscal space and allowing African countries to access affordable long-term financing with better
lending terms by multilateral development banks, amidst increasing risks of debt distress. These
funds are needed for a new cycle of sustainable growth and a reinvigorated business and
innovation climate. The funds are also required for meeting the most urgent needs of the poor,
for instance, through social protection measures. In addition, debt service relief and
restructuring for the worst-hit poorer countries and the extension of the G20 Debt Service
Suspension Initiative (DSSI) will also help create the fiscal space for the kind of urgent spending
needed.
African ministers must turn up the volume in support of the Secretary-General’s advocacy for a
modified G20 Common Framework for effective, fast-tracked, and broad-based debt restructuring.
Furthermore, if multilateral development banks can expand the volume of lending, including
concessional lending, it could be a game changer for struggling countries. This can be achieved
through increasing their capital bases, better leveraging existing capital and implementing
recommendations of the G20 Capital Adequacy Framework Review, and re-channeling Special
Drawing Rights (SDRs) through MDBs. Moreover, as long as African countries remain in need of
urgent resources, the Secretary-General’s SDG Stimulus will also require a new round of SDRs,
resulting in high economic rates of return on sustainable development.
For millions of the previously non-poor and for the poor who face a future of chronic vulnerability,
Africa’s policymakers can use this meeting, ahead of the World Bank / IMF Spring Meetings to tip
the scales towards meaningful, long-lasting change.
Antonio Pedro is the Acting Executive Secretary of the Economic Commission for Africa
@ECA_Official
